At the recent NEACH Payments Insights conference it was interesting to find an audience gripped by two strong emotions – excitement and fear. The excitement was about new opportunities in transaction banking and how the emerging generation of customer will drive change. And the fear? Disintermediation by fierce competition from new market entrants. Those young technology-based companies that seem to be able to change the game in an instant.

Banks are known for their clunky legacy environments – so it’s really not hard to imagine a nimble, non-bank competitor being able to swoop in and eat their lunch. It’s already happening in the retail payments space with organisations such as PayPal and BillMeLater. So it is only a matter of time before the corporate side gets caught up.

The need to appeal to the next generation of customers - the connected-up, internet generation that expects information to be available in an intuitive, collaborative way – can be a key driver of innovation in payments services. On the corporate side, there is still plenty of opportunity for banks to do payments best - to win and retain clients and really shut out new competition.

How? By leveraging their data.

A report from Gartner came to the conclusion that banks will begin to drive new revenue streams from payment information in the form of value-added services. And, in their words, the ability to leverage data is going to be THE differentiator. Investing in payments systems can no longer be just a strategy to reduce costs through automation. The goal of the newest payment systems has to be to add value to the user experience and this can be done by extracting important data that usually resides hidden deep in the back-office.

The challenge then for financial institutions is how to get their hands on this data and deliver it in a simple and timely manner to the customer.  And ideally not just mine the existing internal data, but acquire new forms of client data from services like Electronic Invoice Presentment, and throughout the financial supply chain. The goal is to be in the middle of the flow of data surrounding these transactions.

Using this data to create innovative services will help banks anchor themselves at the heart of these transactions and make it very difficult for new competitors to march in. And SOA technology is the enabler that will get banks up and running quickly, removing traditional legacy constraints.

By focusing on the transaction data that already exists within the bank and adding new forms of data from EIPP, forward thinking banks will be able to not only create new valuable services, they will also differentiate themselves from the competition – both bank and non-bank. It’s as if banks were sitting on a goldmine – if they only started digging.